Some in our industry have been proposing a second
interchange for some months now and that was the topic of last
month’s column. A bad idea. Part of their proposal is using OEM
numbers to write interchange.

That’s folly.

The OEMs have no interest in having the recyclers
adopt their numbering system. Although they appreciate the “green”
aspects of the recycling business, they also see the recyclers
as competitors to one of their most profitable segments, the parts
business. From my recent experience as an owner of GreenLeaf, and
experience with OEMs, they are very concerned about the aftermarket
and alternate suppliers of automotive parts.

The numbering systems of OEMs are designed to
meet their needs, plain and simple, including their not-so-hidden
agenda of having NO interchange. OEMs don’t want aftermarket suppliers
reproducing their parts or filling orders because these suppliers
have figured out that fenders from one model actually fit four
other models and that this same fender will fit 10 more models
if one extra hole is drilled in it.

Forget that our interchange COULD be better.
Why would you want to speak Swahili, when all of your customers,
suppliers and other stakeholders speak English? Another numbering
system is the same thing. We will positively reduce our sales if
we start talking in a language different from the one our customers
speak. Insurers won’t be able to use our data, other recyclers
won’t be able to trade with us, and we will dilute our efforts
in a big way. As discussed in last month’s article, let’s not forget
history. Let’s not forget the harm done to our industry when we
did not have a single system of interchange to keep us speaking
the same language as our customers, suppliers, and stakeholders.

Why is using OEM numbering even being discussed?

Perhaps because the existing interchanges could
be improved? Of that, there is no doubt. I am one of only a handful
of salvage operators who have actually written interchange for
dozens of models for a decade. It’s a LOT of work, and it’s not
an exact science. There is always room for improvement. The real
reason OEM numbering is being discussed has very little to do with
parts and a great deal to do with DATA. The value of our data is
huge. If an alternate indexing system could be utilized, the licensing
costs, and related data value could make many people rich. In my
opinion, that is the true reason that using OEM numbering has been
proposed.

The world is funny; it SHOULD reward a better
mousetrap. However, we all know of cases in which better products
have failed to take hold in the marketplace. Additionally, even
if someone actually could come up with a better interchange, getting
enough operators to switch to it fast enough to make it viable
simply isn’t likely. Here I’ll interject a shameless plug. One
of the primary differences between Pinnacle and Hollander is that
Pinnacle leverages the interchange to help the operator run the
business better. That includes buying, selling, inventorying -
virtually everything. Hollander does a wonderful job of organizing
the inventory and allowing yard owners to sell it, but that’s simply
not enough in today’s competitive marketplace. I know, I know,
Hollander users howl that their system does these things, but one
of my favorite sayings is, “You don’t know what you don’t know.”

Imagine the future with me for just a moment.
Insurers write estimates. They know what it takes to fix cars.
Wouldn’t it be nice if they could make decisions, real time, on
what salvage parts are available to fix those cars? When a car
is not going to be repaired, imagine a future where that same insurer
could get reliable data on what the car could be worth for salvage,
knowing which parts are undamaged, and more importantly, in demand.
Quicker than I wrote this paragraph, our computers can provide
those answers. In the blink of an eye. It’s not a dream, interchange,
ONLY ONE INTERCHANGE, will provide this and SO MANY more opportunities
for all of us. ARE YOU IN?

Ron Sturgeon is past owner of AAA Small Car
World. In 1999, he sold his six Texas locations, with 140 employees,
to Greenleaf. In 2001, he founded North Texas Insurance Auction,
which he sold to Copart in 2002. In 2002, his book “Salvaging
Millions” was published to help small business owners
achieve significant success, and was recently reprinted. In
June 2003, he joined the new ownership and management team
of GreenLeaf. He also manages his real estate holdings and
investments. You can learn more about him at WWW.autosalvageconsultant.com
He can be reached at 5940 Eden, Haltom City, TX 76117, rons@rdsinvestments.com or
817-834-3625 ext 6#.